Supply and Demand Rules When Buying Gold
Precious metals are defined as rare, naturally occurring elements that have high monetary value. Unlike paper currency, which has a fixed face value, the values of these metals are determined by the weight of pure content. This is the biggest advantage precious metals investments have over the stock market.
The face value of the dollar has dropped considerably over the past century, with the most significant inflation happening in the last ten years. The price of gold over the same decade, however, has increased by over four hundred percent, surpassing $1,000 per troy ounce in 2008 for the first time in history. This is an extremely compelling argument for buying gold.
Gold is not easily destroyed, so most of the gold that has been mined throughout history is still in existence today. The supply of gold doesn’t grow quickly at all. Gold mining is a long process. New mines are not found very often, and even when they are, it takes years to extract and refine the raw material. Meanwhile, the worldwide demand for gold continues to increase.
This precious metal has uses in the investment and jewelry markets as well as numerous industrial uses. Electronics and technology rely heavily on gold, as do dental, medical, and even the food, beverage, and beauty industries. As the demand for more gold in each of these areas increases, the supply grows very slowly. This drives prices up higher with every passing year. This might not be great news for the companies buying gold for industrial usage, but it is an excellent thing for those who invest in this metal.
The best way to invest in gold is to buy bullion bars or coins. Each of these has its own advantages and disadvantages within the investment world. Large bars are an efficient way for serious investors to buy. They have a lower premium over the price, and they are commonly held by central banks and dealers. The problems arise when it comes to transport and storage. You need high security to make sure your rather expensive investment is safe.
Buying gold coins, on the other hand, makes it easy to transport and store your investment. You can keep them in a safe in your home or store them in a bank safety deposit box. They are also a less expensive way to invest. The disadvantage to buying coins is that they usually have a higher premium.
However you decide to make your gold investment, talk to an expert who can point you in the right direction. Buying from a reputable dealer will ensure quality and authenticity.